Wall Street reform bill advances, debate to begin on Thursday

Senate Republicans on Wednesday said they had reached a key agreement
with Democrats, paving the way for debate to begin on a sweeping Wall
Street reform bill.

The accord came after Democrats had stepped up their hardball tactics with Republicans in recent days.

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GOP
senators claimed they were not caving to political pressure, but had
won an important victory by reducing the likelihood of future
taxpayer-funded bailouts.

Senate Majority Leader Harry Reid
(D-Nev.) forced Republicans to vote three times over the course of
three days to block the bill. During that span, Democrats hammered
Republicans as the servants of big banks.

At press time, the Senate agreed by unanimous consent to proceed to debate on the legislation.

On
Wednesday, Reid stepped up the pressure by threatening to hold an
all-night session of the Senate to draw more public attention to GOP
efforts to block floor debate.

In a floor speech, Reid said,
“The negotiations we hear so much about are never going to end. It’s
‘As the World Turns,’ the soap opera that never ends.”

Working
with Reid, President Barack Obama has used the bully pulpit to
criticize Republicans and strongly hail the Senate measure. The
president said he was “very pleased” to hear of the news that
Republicans will stop blocking debate on the legislation.

The
Democratic tactics appeared to have had an effect even before Senate
Minority Leader Mitch McConnell’s (R-Ky.) announcement as Republican
centrists softened their opposition and signaled they would allow the
bill to proceed.

McConnell touted the gains his conference made by blocking debate on the Democratic bill for several days.

The
delaying action also gave Republicans more time to study the
legislation and to assemble a broad array of business interests with
concerns over the legislation, setting the stage for an intense debate.

McConnell
said that Senate Banking Committee Chairman Chris Dodd (D-Conn.) made
an important concession to Republicans by agreeing to close “loopholes”
that Republicans say would have let federal officials draw on taxpayer
funds to wind down troubled banks.

“The time afforded by my
Republican colleagues and Sen. Ben Nelson [D-Neb.] was instrumental in
gaining assurances from the chairman that changes will be made to end
taxpayer bailouts and the dangerous notion that certain financial
institutions are too big to fail,” McConnell said.

Nelson voted with Republicans three times to stall debate on the bill.

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The
concession by Dodd to limit the federal government’s ability to draw on
public funds to liquidate large institutions is one Democratic leaders
said last week that they were open to.

At press time, GOP
staffers said the $50 billion fund had been stripped from the bill, but
a senior Democratic aide strongly disputed that assertion.

For
weeks, Republicans argued forcefully the fund would create a “moral
hazard” and embolden banks to engage in risky trades by providing
assurance of government intervention to save bad deals.

The
fact that Dodd declined to jettison the fund shows that he and Reid
clearly believed they had the upper hand in the political debate.

Dodd
said Wednesday that he could not give more ground to Banking Committee
ranking member Richard Shelby (R-Ala.) in private talks and said the
1,400-plus-page measure should come to the floor for senators to debate
and change through amendments.

“They have been productive
talks, but I cannot agree to his desire to weaken consumer protections,
given the enormous abuses we have seen,” Dodd said in a Wednesday
afternoon statement. “It is time for this debate to begin. And it must
be a serious, vigorous debate. It is time for the Senate to operate as
the Senate should.”

Senate Republican centrists began to soften their stance against the bill Tuesday.

Retiring
Sen. George Voinovich (R-Ohio) told reporters that he planned
eventually to vote to begin debate on the Senate bill, undercutting
somewhat Shelby’s ability to prolong talks for several weeks, as some
Republicans wanted.

On Wednesday morning, Sens. Bob Corker
(R-Tenn.) and Susan Collins (R-Maine) also signaled they were getting
ready to allow the Wall Street reform debate to begin.

Corker said in a CNBC television interview Wednesday morning that “there’s no question the bill will come to the floor.”

Collins,
another important swing vote, said on MSNBC that if Dodd and Shelby
failed to reach a broad agreement, “we should proceed” with floor
consideration of a bill.

Democrats had accused Republicans of
trying to negotiate the bill in the dark, behind closed doors, instead
of publicly on the Senate floor, flipping an argument the GOP used
effectively during the healthcare debate.

Shelby said
negotiations hit an impasse and cited his concerns over a new consumer
financial protection office Democrats designed to crack down on
predatory lending.

“This bill still contains a sprawling
new consumer protection bureau that will find and force its way into
facets of our economy that had nothing to do with the housing crisis,”
he said.

Republicans say the bill is so broadly drafted that
auto dealers and other businesses could become ensnared in new federal
regulations.

But Dodd emphatically disputed that concern in a press conference.

“If
they’re a finance company, if their principal business is in financial
finances and products, [they] are covered by this bill,” Dodd said. “If
you’re just a business that has a loan process … you’re not covered by
the consumer financial protection [bureau].”

GOP opposition
to the Wall Street reform debate began to look more politically risky
after Democrats released internal e-mails from Goldman Sachs suggesting
the prominent bank had sold clients assets it knew to be toxic.

On
Tuesday, Sen. Carl Levin (D-Mich.), chairman of the Permanent
Subcommittee on Investigations, grilled Fabrice Tourre, a Goldman
executive named by the Securities and Exchange Commission in a fraud
suit.